Local search evolves painfully but shows promise

Local search seems to be forever poised on the edge of greatness despite being touted as The Next Big Thing in terms of growth and spending.

Kelsey Group estimates local online ad spending to hit $11.1 billion by 2011. SEMPO announced in 2006 that more than half of advertisers reported positive results with locally targeted search ads. And with the promise of mobile advertising as the local search “killer app,” we're promised a surge in local advertiser investment. Yet both publishers and advertisers struggle with the buy as many express frustration in getting the “last mile” fully monetized and optimized.

So what are the obstacles and opportunities for advertisers?

Local search is underdeveloped Users are still finding local search to be a frustrating experience. For local advertisers, controlling ad spend is limited to the effectiveness of the search engines' ability to properly target for us. Given the relatively low volume of most local campaigns, targeting is inexact and many local search ads go un-shown and un-clicked.

National/global advertisers ignore local search National brands often overlook their local opportunities, assuming that their national and global buys are sufficient. But there are many reasons to spend time and money on enhancing a local presence, such as attracting local job applicants, supporting national ad campaigns at a retail/local level and getting access to mobile queries.

SMBs are too busy to deal with PPC auctions Small to mid-size businesses are generally understaffed and don't have a dedicated interactive marketing staff. CPA buys would seem to be the answer. Local advertisers can pay per call or per lead. But even this approach has limitations. For one thing, most small companies don't have adequate site tracking or lifetime-customer value tracking (or event rudimentary CRM), so they can't properly value what to pay per action. And because more than half of local customers will “convert” offline or cross-channel, CPA vendors are leaving money on the table.

All concerns aside, it appears that local search is close to hitting its stride. There is a bevy of users seeking local information, with more than 100 million queries a month having local intent, according to comScore.

Dana Todd is co-founder and principal at SiteLab International Inc., San Diego. Reach her at dana@sitelab.com.